Hint: You probably shouldn’t lease a car…

In modern life, those with the most knowledge usually win. So, for instance, if you buy insurance, you should only buy it for what you need but can’t afford to replace, OR if you know something the insurance company doesn’t.

In car finance the same applies. For instance, lease deals can seem attractive. $199 a month to drive some fancy car you never thought you could afford. The problem lies in the fine print:

Here’s one such complicated arrangement. Mini-USA is offering a $199/month deal on its 2011 Cooper 2-door hatchback. Sounds good. But buyers must show up with $2,727 as a down payment. And they must drive the small car small distances — no more than 833 miles per month. The punishment for excessive mileage? A not mini 20 cents per mile. Someone who drives the normal 36,000 during that three-year Cooper lease ends up with a $1,200 bill at the end. Drive 15,000 miles per year, and the bill is a whopping $3,000.

So, if you KNOW for sure that you will be using the car for occasional trips. And you will be well under the mileage. And you understand and won’t test the other conditions, maybe the lease is right for you.

Lacking that… pay cash, or finance a used car, on the best terms you can. You need wheels, not fun. Buy the least you can, and that includes money – which is really what you are buying with a car lease or loan.